📬 Employer Due Diligence: Spotting Red Flags

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I’m always looking for more Mailbag questions. Submit your questions here, and I’ll do my best to get to them in the coming weeks.

We’ve got some great topics today. Here’s what’s on tap:

Now, let’s get into it.

Synergy Casualty VP from the USA asked:

Long time listener, first time caller.

The Founders of the Saas company that I'm the VP of Finance for have decided to hire a banker and run a sale process due to some inbound acquisition interest. Each potential acquirer would be strategic in nature, with some being PE-backed.

Assuming the sale and diligence processes go well (fingers crossed), I'd love to hear your opinion on what someone in my role should do Day 1, Day 30, Day 60, etc., post acquisition? I know it's a bit of a leading question, given a lot of this will be discussed pre-acquisition.

Thanks for the question.

You read my mind. Post-acquisition planning is mostly irrelevant at this stage. It’s guesswork. Every strategic acquirer has their own playbook, their own capital cycles, their own integration philosophy. There’s no point crystal-balling Day 1, 30, 60. So I’m not going to answer the question directly, but I can give you the right frame to think about it through.

Right now, there are really two things to focus on:

On the first point: If you don’t have a meaningful equity stake, then negotiate yourself a healthy transaction or retention bonus. That way, you’re incentivized to go all out to get the deal done without worrying about whether you’ve got a chair afterwards.

Second: Make yourself indispensable. Impress your founders, the bankers, and the potential acquirers. At least half of your fate is out of your hands. The acquirer will either need a VP Finance to travel with the deal, or they’ll have infrastructure to absorb you. What is in your control is the quality of your work and your professionalism.

And don’t kid yourself, I’ve seen deals where the acquiring CFO got fired on Day 1 because the owners preferred the person who came with the acquired business. It happens. That’s why you prepare for both outcomes: a nest egg if you’re out, and a reputation that makes people fight to keep you if you’re in.

One more thing: Don’t overlook the career upside here. A sale process means exposure to bankers, investors, and strategic acquirers you wouldn’t normally meet. Even if you don’t end up staying with the buyer, those relationships can be career-defining. Use them.

TLDR: Protect your downside, put your head down, and make yourself indispensable.

Ben from New York asked:

I'm the CFO of a real estate developer/investor (first-time CFO, I should add). We're highly leveraged, as you may expect, but it’s warranted given the predictability of our future cash flows.

Our portfolio largely has 5+ year leases with excellent geographic, tenant, and industry diversification. Historically, we've opted almost entirely for fixed-rate loans, which either come to term when leases expire or have a rate reset around lease expiration.

For additional context: 95% of our debt is secured long-term mortgages. The remaining 5% is short-term (6-24 months) secured bridges. Fixed-rate is predictable and, frankly, easy to manage from a finance/treasury operations perspective. Should I think about adding floating-rate debt to the mix? How should I approach this?

Thanks for the question, Ben.

The right answer here is specific to your portfolio and the macro environment, but here are a few principles to think about:

1. Get clear on your true fixed vs float position

You say 95% of your debt is long-term fixed and 5% is short-term bridges. I’d assume those bridges are floating. And probably more expensive than your fixed debt (especially if some of your fixed deals pre-date 2022). So while it’s only 5% of principal, it could be a much bigger share of your interest expense. Always measure both the mix as a % of interest cost under different rate scenarios, and % mix of principal.

Also, check if you’ve got any floating exposure buried elsewhere (revolvers, construction lines, etc.).

2. Don’t just look at debt. Look at cash flows.

It’s easy to say, “Our leases are 5+ years, so cash flows are predictable.” True in the base case. But, in a downturn, tenant failures can blow holes in that predictability. Floating exposure is most dangerous when rent collections are stressed, because rate and tenant risk can be correlated.

3. Assess your natural hedge, but be realistic

If your leases have inflation-linked rent reviews, that’s a partial hedge. Higher inflation = higher rents = some offset to higher floating interest. But in practice, most markets cap rent escalations at 3–4%. Rates can move 500 bps in a year (we just lived through it). The timing and magnitude don’t line up. Treat it as a partial buffer, not a free hedge.

4. Watch your refinancing cliffs

Matching maturities to lease expiries is good discipline, but in practice, asset sales, tenant churn, and refinancing cycles rarely align neatly. Liquidity risk (forced into refinancing a big slug of debt when markets are shut or expensive) is often a bigger danger than the fixed vs float debate.

5. Find your “neutral” position

There’s a point where your debt mix is neutral relative to your cash flows. Above that, you’re effectively betting on rates rising faster than the forward curve. Below that, you’re betting on rates falling. Today, with 95% fixed, you are implicitly betting on higher-for-longer. Even if you haven’t made that decision explicitly, that’s the position you’ve taken.

Your job is to make that implicit bet explicit. Define the equilibrium point for your portfolio, and decide if you want to be on, above, or below it.

6. Anchor it to your investor mandate

This isn’t just treasury housekeeping, it has to reflect your fund’s strategy. Core funds prize stability, so they bias heavily towards fixed. Opportunistic or value-add funds may want floating exposure because it gives them leverage to falling-rate cycles. Your mix should reflect the return profile your investors signed up for.

7. Then decide how to execute

Once you know the position you want, there are plenty of mechanics:

TLDR: Understand your true rate exposure. Understand your risk neutral position. Then make sure any rate based bet you make is conscious vs that risk neutral position.

Bilbo Bagsofcash from Philly, PA, USA asked:

Hi Secret - first time, long time. As a candidate in the interview process for finance leadership roles, what tips would you have for how to try to look for red flags in a potential role, team, or organization? (While still appearing respectful of confidentiality, as well as not coming off like a nosy jerk.) As I’ve gained more experience and advanced in my career, I feel like I know more of WHAT to look for (or avoid), but I’m not sure HOW to look for it.

Bilbo, good due diligence isn’t just important for you. Your potential employer should expect you to do it. It shows you’re a serious professional who takes commitments seriously.

Story time: in a previous CFO role, we had a change in Chair. The incoming Chair was a rockstar. A former CEO and CFO at some very large businesses. Before he signed his contract, he met every lender, read every board pack from the last two years, and met all key management. He left no stone unturned. He knew where the bodies were buried before he put pen to paper.

The way he thought about protecting his time and reputation totally changed how I thought about mine. Big-league pros always do their homework. You don’t need to go to his extremes, but the principle stands: treat your own time and reputation with the same respect.

The question is how you do it without looking like a nosy jerk. The answer is timing and framing. You can step up your diligence as you move through the process so neither you nor your prospective employer is wasting their time

How can they reasonably say no? And if they do… well, that probably tells you what you need to know.

You aren’t looking for perfect, you’re looking for alignment between the story and the reality. It will tell you a lot about culture and issues in the business you are about to join.

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A few of the biggest stories that every CFO is paying close attention to. This is the section you might not want to see your name in.

Two companies merging is complicated. Three is a veritable sh*tshow. But… FIVE? Five accounting firms, WSRP, MKA (Moss, Krusick & Associates), Sobul Primes & Schenkel, The Doty Group, and Richey May, are all coming together under the Denver-based Richey May banner.

Remember the 5-way merger next time your M&A deal seems a little complex…

It appears that the easiest way to land a CFO role in 2025 is to wait around for your CFO to leave and/or get caught cheating on their spouse with the head of HR at a Coldplay concert.

A study shows that of the 71 Fortune 500 and S&P 500 CFO spots that had to be filled in the first half of 2025, 51 were internal hires and 20 were external hires.

The unicorn company Fruitist and its superfood berries will always make me think of the “reverse funnel” Invigaron system…

But I digress… Fruitist just brought on a tech-world heavy hitter. Rich Sullivan has 20 years of experience from SurveyMonkey, Acorns, and Twitter.

In case you missed it, Zuck dropped a capex bomb at a recent White House dinner, estimating that Meta will be spending $600B on US data centers and infrastructure through 2028. CFO Susan Li had to pick up the pieces and explain that promise to stakeholders.

Per Susan, that capex figure refers to “the total envelope” of Meta’s US investment plans, including all Meta US business operations. Good to see I’m not the only one who has to sweep up behind a CEO capex promise.

But also … Susan, have you been reading my CFO Secrets Playbook on The Capex Envelope? Are you reading this right now?

ICYMI, here are some of my favorite finance/business social media posts from this week. In the words of Kendall Roy, “all bangers, all the time.”:

Worth the $100B capital allocation or no?

Let me know what you thought of today’s Mailbag. Just hit reply… I read every message.

On Saturday, I shared how the CFO’s best friend in a crisis is the war room. When a crisis comes, carve it out of business-as-usual. A war room with its own rules keeps focus and momentum. Check out the newsletter now

Disclaimer: I am not your accountant, tax advisor, lawyer, CFO, director, or friend. Well, maybe I’m your friend, but I am not any of those other things. Everything I publish represents my opinions only, not advice. Running the finances for a company is serious business, and you should take the proper advice you need.